No senator, he said, could pretend to claim that "even a third part of the people of Virginia have ever had any thing to do with rendering their a.s.sent to the making of this new State within the territorial limits of that ancient Commonwealth." He declared this to be "a dangerous precedent which overthrows the Const.i.tution and may be fraught with direful consequences." "Out of the one hundred and sixty counties that compose the State of Virginia," he continued, "less than one-fourth have a.s.sumed to act for the entire State; and even within the boundaries of the new State more than half the voters have declined to take part in the elections."

Mr. Willey argued that the Legislature represented the almost unanimous will of all the loyal people of West Virginia. He said that "besides the 19,000 votes cast, there were 10,100 men absent in the Union army, and that, the conclusion being foregone, the people had not been careful to come out to vote, knowing that the const.i.tution would be overwhelmingly adopted." On the 14th of July, three days before Congress adjourned, the bill pa.s.sed the Senate by a vote of 23 to 17. Mr. Rice of Minnesota was the only Democrat who favored the admission of the new State. The other Democratic senators voted against it. Mr. Chandler and Mr. Howard of Michigan voted in the negative because the State had voluntarily done nothing towards providing for the emanc.i.p.ation of slaves; Mr.

Sumner and Mr. Wilson, because the State had rejected the anti- slavery amendment; Mr. Trumbull and Mr. Cowan, because of the irregularity of the whole proceeding.

ADMISSION OF WEST VIRGINIA TO THE UNION.

The bill was not considered in the House until the next session.

It was taken up on the 9th of December and was vigorously attacked by Mr. Conway of Kansas. He questioned the validity of the Pierpont Government and asked whether the law which gave him his warrant of authority had come from "a mob or from a ma.s.s-meeting." He said he had "serious reason to believe that it is the intention of the President to encourage the formation of State organizations in all the seceded States, and that a few individuals are to a.s.sume State powers wherever a military encampment can be effected in any of the rebellious districts." Mr. Conway denounced this scheme as "utterly and flagrantly unconst.i.tutional, as radically revolutionary in character and deserving the reprobation of every loyal citizen."

It aimed, he said, at "an utter subversion of our const.i.tutional system and will consolidate all power in the hands of the Executive."

He was answered with spirit by Mr. Colfax of Indiana, who reviewed the successive steps by which the legality of the Virginia government had been recognized by the President and by all the departments of the executive government. He argued that West Virginia had taken every step regularly and complied with every requirement of the Const.i.tution.

Mr. Crittenden of Kentucky said the Wheeling government could be regarded as the government of the whole State of Virginia "only by a mere fiction. We _know_ the fact to be otherwise." He said it was the party applying for admission that consented to the admission, and that was the whole of it. When the war should cease and the National authority should be re-established he wanted the Union as it was. This would be "a new-made Union--the old majestic body cut and slashed by pa.s.sion, by war, coming to form another government, another Union. The Const.i.tution gives us no power to do what we are asked to do." Mr. Maynard said there were "two governors and two Legislatures a.s.suming authority over Virginia simultaneously.

The question here is which shall the Government of the United States recognize as the true and lawful Legislature of Virginia?" He contended that it had already been settled, by the admission of members of both branches of Congress under the Pierpont Government.

Mr. Dawes affirmed that "n.o.body has given his consent to the division of the State of Virginia and the erection of a new State who does not reside within the new State itself." He contended therefore that "this bill does not comply with the spirit of the Const.i.tution.

If the remaining portions of Virginia are under duress while this consent is given, it is a mere mockery of the Const.i.tution." Mr.

Brown of Virginia, from that part which was to be included in the new State, corrected Mr. Dawes, but the latter maintained that while a member of the Legislature "was picked up in Fairfax and two or three gentlemen in other parts of the State, they protested themselves that they did not pretend to represent the counties from which they hailed."

Mr. Thaddeus Stevens said he did not desire to be understood as "sharing the delusion that we are admitting West Virginia in pursuance of any provision of the Const.i.tution." He could "find no provision justifying it, and the argument in favor of it originates with those who either honestly entertain an erroneous opinion, or who desire to justify by a forced construction an act which they have predetermined to do." He maintained that it was "but mockery to say that the Legislature of Virginia has ever consented to the division. Only two hundred thousand out of a million and a quarter of people have partic.i.p.ated in the proceedings." He contended that "the State of Virginia has a regular organization, and by a large majority of the people it has changed its relations to the Federal Government." He knew that this was treason in the individuals who partic.i.p.ated in it; but so far as the State was concerned, it was a valid act. Our government, he argued, "does not act upon a State.

The State, as a separate distinct body, is the State of a majority of the people of Virginia, whether rebel or loyal, whether convict or free men. The majority of the people of Virginia is the State of Virginia, although individuals have committed treason." "Governor Pierpont," continued Mr. Stevens, "is an excellent man, and I wish he were the Governor elected by the people of Virginia. But according to my principles operating at the present time I can vote for the admission of West Virginia without any compunctions of conscience--only with some doubt about the policy of it. None of the States now in rebellion are ent.i.tled to the protection of the Const.i.tution. These proceedings are in virtue of the laws of war.

We may admit West Virginia as a new State, not by virtue of any provision of the Const.i.tution but under our absolute power which the laws of war give us in the circ.u.mstances in which we are placed.

I shall vote for this bill upon that theory, and upon that alone.

I will not stultify myself by supposing that we have any warrant in the Const.i.tution for this proceeding."

ADMISSION OF WEST VIRGINIA TO THE UNION.

Mr. Bingham of Ohio made an able argument princ.i.p.ally devoted to reb.u.t.ting the somewhat mischievous ground a.s.sumed by Mr. Stevens.

He affirmed that "the minority of the people of the State cannot be deprived of their rights because the majority have committed treason." He argued that, the majority of the people of Virginia having become rebels, the State was in the hands of the loyal minority, who in that event had a right to administer the laws, maintain the authority of the State government, and elect a State Legislature and a Governor, through whom they might call upon the Federal Government for protection against domestic violence, according to the express guaranty of the Const.i.tution. "To deny this proposition," continued Mr. Bingham, "is to say that when the majority in any State revolt against the laws, the State government can never be re-organized nor the rights of the minority protected so long as the majority are in revolt." He contended that the doctrine he advocated was not a new one, that it was as old as the Const.i.tution, and he called attention to the remarkable letter of "The Federalist," addressed by Mr. Madison to the American people in which "he who is called the author of the Const.i.tution" asked: "Why may not illicit combinations for purposes of violence be formed as well by a majority of a State as by a majority of a county or district of the same State? And if the authority of the State ought in the latter case to protect the local magistrate, ought not the Federal authority in the former case to support the State authority?"

Mr. Segar, who represented the district including Fortress Monroe, pleaded very earnestly against the dismemberment of his State and he argued, as Mr. Powell had argued in the Senate, that there was no evidence that a majority of the people within the counties which were to compose the new State had ever given their a.s.sent to its formation. The ordinary vote of those counties he said was 48,000 while on the new State question the entire vote cast was only 19,000. He named ten counties included in the new State organization in which not a single vote had been cast on either side of the question at the special election. Though loyal to the Union and grieving over the rebellious course of Virginia he begged that this humiliation might be spared her. "Let there not be two Virginias; let us remain one and united. Do not break up the rich cl.u.s.ter of glorious memories and a.s.sociations which gather over the name and the history of this ancient and once glorious Commonwealth."

On the pa.s.sage of the bill the ayes were 96 and the noes were 55.

The ayes were wholly from the Republican party, though several prominent Republicans opposed the measure. Almost the entire Ma.s.sachusetts delegation voted in the negative, as did also Mr.

Roscoe Conkling, Mr. Conway of Kansas and Mr. Francis Thomas of Maryland. The wide difference of opinion concerning this act was not unnatural. But the cause of the Union was aided by the addition of another loyal commonwealth, and substantial justice was done to the brave people of the new State who by their loyalty had earned the right to be freed from the domination which had fretted them and from the a.s.sociation which was uncongenial to them.

To the old State of Virginia the blow was a heavy one. In the years following the war it added seriously to her financial embarra.s.sment, and it has in many ways obstructed her prosperity.

As a punitive measure, for the chastening of Virginia, it cannot be defended. a.s.suredly there was no ground for distressing Virginia by penal enactments that did not apply equally to every other State of the Confederacy. Common justice revolts at the selection of one man for punishment from eleven who have all been guilty of the same offense. If punishment had been designed there was equal reason for stripping Texas of her vast domain and for withdrawing the numerous land grants which had been generously made by the National Government to many of the States in rebellion. But Texas was allowed to emerge from the contest without the forfeiture of an acre, and Congress, so far from withdrawing the land grants by which other Southern States were to be enriched, took pains to renew them in the years succeeding the war. The autonomy of Virginia alone was disturbed. Upon Virginia alone fell the penalty, which if due to any was due to all.

THE PUBLIC DEBT OF VIRGINIA.

Another consideration is of great weight. An innocent third party was involved. Virginia owed a large debt, held in great part by loyal citizens of the North and by subjects of foreign countries.

The burden was already as heavy as she could bear in her entirety, and dismemberment so crippled her that she could not meet her obligations. The United States might well have relieved Virginia and have done justice to her creditors by making some allowance for the division of her territory. Regarding her only as ent.i.tled to the rights of a public enemy so long as she warred upon the Union, we may confidently maintain that she is ent.i.tled at least to as just and magnanimous treatment as the National Government extends to a foreign foe. In our war with Mexico it became our interest to acquire a large part of the territory owned by that republic. We had conquered her armies and were in possession of her capital. She was helpless in our hands. But the high sense of justice which has always distinguished the United States in her public policies would not permit the despoilment of Mexico. We negotiated therefore for the territory needed, and paid for it a larger price than would have been given by any other nation in the world. The American Government went still farther. Many of our citizens held large claims against Mexico, and the failure to pay them had been one of the causes that precipitated hostilities.

Our government in addition to the money consideration of fifteen millions of dollars which we paid for territory, agreed to exonerate Mexico from all demands of our citizens, and to pay them from our own Treasury. This supplementary agreement cost the National Treasury nearly four million dollars.

If the United State were willing to place Virginia on the basis on which they magnanimously placed Mexico after the conquest of that Republic, a sufficient allowance would be made to her to compensate at least for that part of her public debt which might presumptively be represented by the territory taken from her. If it be said in answer to such a suggestion that it would be fairer for West Virginia to a.s.sume the proportional obligation thus indicated, the prompt rejoinder is that in equity her people are not held to such obligation. The public improvements for which the debt was in large part incurred had not been so far completed as to benefit West Virginia when the civil war began,--their advantages being mainly confined to the Tide-water and Piedmont sections of the State. There is indeed neither moral nor legal responsibility resting upon West Virginia for any part of the debt of the old State.

In determining the relative obligations of the National Government and of the government of West Virginia, concerning the debt, it is of the first importance to remember that the new State was not primarily organized and admitted to the Union for the benefit of her own people, but in far larger degree for the benefit of the people of the whole Union. The organic law would not have been strained, legal fictions would not have been invented, contradictory theories would not have been indulged, if a great national interest had not demanded the creation of West Virginia. If it had not been apparent that the organization of West Virginia was an advantage to the loyal cause; if the border-State policy of Mr. Lincoln, so rigidly adhered to throughout the contest, had not required this link for the completion of its chain,--the wishes of the people most directly involved would never have had the slightest attention from the Congress of the United States. Strong and equitable as was the case of West Virginia, irritating and undesirable as her relations to the older State might be, advantageous to the people as the new government might prove, these considerations would not of themselves have offered sufficient inducement to engage the attention of Congress for an hour at that critical period. They would have been brushed aside and disregarded with that cool indifference by which all great legislative bodies prove how easy it is to endure the misery of other people. West Virginia indeed got only what was equitably due, and what she was ent.i.tled to claim by the natural right of self-government. The war brought good fortune to her as conspicuously as it brought ill fortune to the older State from which she was wrenched. West Virginia is to be congratulated, and her creditable career and untiring enterprise since she a.s.sumed the responsibilities of self-government show how well she deserved the boon. But the wounds inflicted on the mother State by her separation will never be healed until Virginia is relieved from the odium of having been specially selected from the eleven seceding States for the punishment that struck at once against her prosperity and against her pride of empire.

Nor should it be forgotten that the State of Virginia before the war might well be regarded as the creditor and not the debtor of the National Government. One of her earliest acts of patriotism as an independent State was the cession to the General Government of her superb domain on the north side of the Ohio River, from the sale of which more than one hundred millions of dollars have been paid into the National Treasury. A suggestive contrast is presented to-day between the condition of Virginia and the condition of Texas and Florida. It was the aggressive disunionism of the two latter States which aided powerfully in dragging Virginia into rebellion.

But for the urgency of the seven original Confederate States, in which Texas and Florida were numbered, Virginia Loyalists would have been able to hold their State firm in her National allegiance.

Since the war Texas has traveled the highway to wealth and power, founded on the ownership of her public lands, of which the National Government could have deprived her with as little difficulty as was found in dividing Virginia. Florida has likewise enjoyed general prosperity, and secured rapid development from the resources of land which the National Government had generously given her before the war and of which she was not deprived for her acts of rebellion.

True-hearted Americans rejoice in the prosperity of these States which adorn the southern border of the Republic; but they cannot help seeing, and seeing with regret, how differently the ancient Commonwealth of Virginia has fared at the hands of the National Government.

EQUITABLE CONSIDERATIONS INVOLVED.

If the hurt to Virginia were of a general character, which could not be specified or defined, her case might be pa.s.sed over with the plea of _d.a.m.num absque injurid_. But, unfortunately,--or it may be fortunately,--the detriment to her public credit can be stated with substantial precision, and can be traced directly to her despoilment. That took from her the power to pay her debt.

If the harm resulting therefrom were confined to the State and to the holders of her securities, the National Government might the more easily disregard the equities of the case. But Virginia's embarra.s.sment is of wide-spread concern, and injuriously affects the public credit of other States. Nor can it be said that the precedent of aiding Virginia could be quoted for aid to every State that might get into financial trouble. It could be quoted only for the case--which will perhaps never again occur--where the National Government shall strip the State of a large and valuable part of her territory, and thus take from her the ability to meet her obligations. The precedent might then be quoted, and should be unhesitatingly followed.

In the formal and necessarily austere administration of public affairs there is little room for the interposition of sentiment.

Yet sentiment has its place. We stimulate the ardor of patriotism by the mere display of a flag which has no material force, but which is emblematic of all material force, and typifies the glory of the Nation. We stir the ambition of the living by rearing costly monuments to the heroic dead. It may surely be pardoned if Americans shall feel a deep personal interest in the good name and good fortune of a State so closely identified with the early renown of the Republic,--a State with whose soil is mingled the dust of those to whom all States and all generations are debtors,--the Father of his Country, the author of the Declaration of Independence, the chief projector of the National Const.i.tution.

CHAPTER XXII.

National Currency and State Bank Currency.--In Compet.i.tion.--Legal- tender Bill tended to expand State Bank Circulation.--Secretary Chase's Recommendation.--Favorably received.--State Bank Circulation, $150,000,000.--Preliminary Bill to establish National Banks.-- Fessenden.--Sherman.--Hooper.--National Bank System in 1862.-- Discussed among the People.--Recommended by the President.--Mr.

Chase urges it.--Bill introduced and discussed in Senate.--Discussion in the House.--Bill pa.s.sed.--Hugh McCulloch of Indiana appointed Comptroller of the Currency.--Amended Bank Act.--To remedy Defects, Circulation limited to $500,000,000.--National Power.--State Rights.

--Taxation.--Renewed Debate in Senate and House.--Bill pa.s.sed.-- Merits of the System.--Former Systems.--First Bank of the United States.--Charters of United-States banks, 1791-1816.--National Banks compared with United-States Banks.--One Defective Element.-- Founded on National Debt.

The Secretary of the Treasury had not failed to see that a constant conflict and damaging compet.i.tion must ensue between the currency of the Nation and the currency of the State banks. It was the course of the banks more than any other agency that had discredited the "demand notes" and demonstrated to the Treasury Department and to Congress the absolute necessity of imparting the legal-tender quality to the paper issued by the government. As this paper took the place of gold and silver in the payment of every obligation, both corporate and individual,--except duties on imports and interest on the National debt,--it was made easy for the State banks to extend their circulation. It was quite practicable for them to keep a sufficient amount of legal-tender paper in their vaults to meet all the probable requirements of redemption, and they were thus tempted to expand their loans and issue their own bills to a dangerous extent. It was indeed hardly necessary to provide legal- tender notes to redeem their own bills. One kind of paper money, to a large proportion of the public, was practically as good as another. Coin redemption being abandoned, the banks in a certain sense lost all moral and legal restraint. The enactment of the Legal-tender Bill had not therefore given the control of the currency to the government. It had only increased the dangers of inflation by the stimulus it imparted and the protection it afforded to the circulation of State bank notes.

SECRETARY CHASE'S RECOMMENDATION.

Secretary Chase had grasped the situation earlier than the experienced financiers who a.s.sumed to be his special advisers, and while he was, in the opinion of unjust critics, completely in the hands of the State banks, he surprised the country by recommending in his report of December, 1861, the establishment of a National system that should give the General Government complete control of the currency. The State bank circulation in the loyal States he estimated at $150,000,000. "The whole of it," he regarded as "a loan without interest from the people to the banks." The secretary thought "it deserves consideration whether sound policy does not require that the advantages of this loan be transferred from the banks, representing the interest of stockholders, to the government representing the aggregate interest of the whole people." Attention was called to the fact that "the existing circulation depends on the laws of thirty-four States and the character of some sixteen hundred private corporations." It was somewhat startling to learn that "the circulation is usually furnished in greatest proportion by inst.i.tutions of least actual capital and is commonly in the inverse ratio of solvency."

The bold and comprehensive recommendation of Mr. Chase was favorably received by many of the leading men in Congress and by many of the ablest financiers of the country. The committees of both Senate and House were well disposed, but preferred time for consultation and deliberation. The Secretary of the Treasury, with the aid of Mr. E. G. Spaulding, Mr. Sherman, and Mr. Samuel Hooper, engaged in the preparation of a bank bill which in due time was submitted to the Committee of Ways and Means. The committee was at that moment engaged on the Internal-revenue Bill, the important character of which absorbed the attention of Congress. The adjustment of the tariff duties to the excise taxes was also a serious labor which left no adequate time to mature a bank bill in season for its consideration at that session. Indeed the committee was not able to report the bill to the House until the 12th of July, 1862, when five thousand extra copies were printed for distribution among the financial inst.i.tutions of the country. It was deemed wise to give the people time to consider so important a measure, and with that end in view all further action was postponed to the next session.

Meanwhile the bill was published in the leading papers of the loyal States and elicited the most diverse opinion. It was however received with favor by the public. Those interested in the State banks were at first exceedingly hostile to it. The proposition to tax their circulation two per cent. in addition to the three per cent. imposed upon incomes by the new law was considered harsh and unjust. The object was to compel the retirement of the State bank circulation. In no other way could a national system be at once generally inst.i.tuted. The courts had repeatedly held the authority of the States to charter banks with power to issue and circulate notes as money, to be const.i.tutional. Congress could not abridge this right in any way by direct legislation. Its power to tax was however undoubted. The friends of the State bank system claimed that the indirect method of destroying the inst.i.tution by taxing its notes out of existence was an arbitrary exercise of questionable power.

The advocates of a uniform and stable system of banking to cure the manifold evils then prevailing, admitted that the prerogative of the States could not be questioned, but urged that the exercise of it had invariably increased and often produced the financial troubles which had afflicted the country in the past. If the States would not surrender their prerogative, the National Government would be compelled to exercise its larger prerogative embodied in the power to tax. The right of the nation to do this had been a.s.serted by the head of the Treasury under a Democratic administration some years before. Recognizing as he did the necessity of a reform in the system of banking, Secretary Guthrie in his report to Congress in 1855 declared that "if the States shall continue the charter and multiplication of banks with authority to issue and circulate notes as money, and fail to apply any adequate remedy to the increasing evil, and also fail to invest Congress with the necessary power to prohibit the same, Congress may be justified in the exercise of the power to levy an excise upon them, and thus render the authority to issue and circulate them valueless."

THE SYSTEM OF NATIONAL BANKS.

During the autumn of 1862 the bank question was subjected to a thorough discussion among the people. The legal-tender notes had already become popular, and were evidently preferred by the public to the notes of local banks. The depression naturally incident to continued reverses in the field led to the defeat of the Administration in many of the State elections, but despite the operation of all adverse causes the general trade of the country was good. The crops had been abundant and prices were remunerative. All that had been claimed for the legal-tender bill by its most sanguine advocates had been realized in the business of the country. The one disappointment was their failure to keep at par with gold; but even this, in the general prosperity among the people, did not create discouragement. The Internal-revenue system had but just gone into operation, and the only feature embarra.s.sing to the people was the requirement that the taxes should be paid in the legal- tender paper of the government. No provision of law could have operated so powerfully for a system of National banks. The people were subjected to annoyance and often to expense in exchanging the notes of their local banks for the government medium. The internal fiscal machinery of the government evidently required places of deposit. The tax-collectors could not intrust the funds in their hands to State banks except at their own risk. The money of the government was thus liable to loss from the absence of responsible agencies under the control of National power. The fact that the bills of State banks were not receivable for taxes tended constantly to bring them into disrepute. The refusal of the government to trust its funds in the keeping of the State banks was nothing less than the requirement of the Sub-treasury Act, but to the popular apprehension it was a manifestation of distrust which did the banks great harm. The total revenue of the National Government had before the war been collected at a few custom-houses on the coast, and the public had not been generally familiar with the mode of its safe-keeping. The system of internal taxes now reached the interior, and the people were made daily witnesses of the fact that the government would not trust a dollar of its money in the vaults of a State bank.

Under the influences thus at work, the friends of the State banks plainly saw that the National system was growing in favor, and they began to admit that its creation might facilitate the financial operations of the country. Many of them were willing to give it a fair trial. The advocates of the National system constantly pressed their cause among the people. The five-twenty six per cent. bonds, into which the legal tenders were convertible, offered, as they explained, an excellent basis for banking. Their absorption for that purpose would create not only a market for that cla.s.s of securities but inevitably cause them to appreciate in value. The government would thus be largely benefitted, and its cause would be strengthened by the silent influence of self-interest which would certainly be developed by the general distribution of its bonds as the basis of a national currency. It was also urged that the existing banks could with great facility and without sacrifice re-organize under the proposed national law.

The popular mind having been thus favorably turned towards the system of national banks, the President specifically approved it in his message to Congress in December, 1862. Expressing his doubts "whether a circulation of United-States notes, payable in coin, and sufficiently large for the wants of the people, can be permanently, usefully, and safely maintained," Mr. Lincoln asked if there was "any other mode by which necessary provision for the public wants can be made, and the great advantage of a safe and uniform currency secured?" He declared that he knew of none "which promises so certain results, and is at the same time so un.o.bjectionable, as the organization of banking a.s.sociations under a general law of Congress well guarded in its provisions." Mr. Chase elaborated his recommendation of the preceding year to the same effect. He asked that "a tax might be imposed on the notes of existing banks such as would practically exclude them from circulation." In their stead the legal-tender notes would be used, but he preferred "a circulation furnished by the government but issued by banking a.s.sociations organized under a general Act of Congress."

Mr. Chase said "the central idea of the proposed measure is the establishment of one uniform circulation, of equal value throughout the country, upon the foundation of national credit combined with private capital." He suggested that "these a.s.sociations be entirely voluntary. Any persons desirous of employing real capital in sufficient amounts, can, if the plan be adopted, unite together under proper articles, and having contributed the requisite capital can invest such part of it, not less than a fixed minimum, in United- States bonds, and having deposited these bonds with the proper officer of the United States can receive United-States notes in such denominations as may be desired, and employ them as money in discounts and exchanges." As a further inducement, the secretary said "the stockholders of any existing banks can in like manner organize under the Act, and transfer, by such degrees as may be found convenient, the capital of the old to the use of the new a.s.sociations. The notes thus put into circulation will be payable until resumption in United-States notes, and after resumption in specie, by the a.s.sociation which issues them, on demand, and if not so paid will be redeemable at the Treasury of the United States from the proceeds of the bonds pledged in security." The secretary thought it would be "difficult to conceive of a note circulation which will combine higher local and general credit than this.

After a few years no other circulation would be used, nor could the issues of the national circulation be easily increased beyond the legitimate demands of business. Every dollar of circulation would represent real capital actually invested in national stocks, and the total amount issued could at all times be easily and quickly ascertained from the books of the Treasury."

SENATE DISCUSSES THE BANKING SYSTEM.

The bill to carry out these suggestions was introduced in the Senate on the 26th of January, 1863, by Mr. Sherman, and was reported from the Finance Committee on the 2d of February. On the 9th the Senate took it up for consideration. Mr. Sherman advocated the proposed system in an elaborate argument on several distinct grounds: "The banks would furnish a market for United-States bonds; they would absorb the circulation of the State banks gradually and without harsh measures; they would create a community of interest between the stockholders of the banks, the people, and the government, where now there existed a great contrariety of opinion and a great diversity of interests; adequate safeguards would be established against counterfeiting; the currency proposed would be uniform and would take the place of the notes of sixteen hundred banks, differing in style, and so easily imitated and altered that while notes of one-sixth of the existing banks had been counterfeited, 1,861 kinds of imitations were afloat, and 3,039 alterations, in addition to 1,685 spurious notes, in which hardly any care had been taken to show any resemblance to the genuine." The national banks would be depositories of public moneys and their notes would be receivable for taxes. He concluded by declaring that "we cannot maintain our nationality unless we establish a sound and stable financial system, and as the basis of it we must have a uniform national currency."

Accordingly he deemed the pa.s.sage of the pending bill "more important than any other measure now pending either in Senate or House."

--Mr. Henderson of Missouri sought to limit the system to banks with a capital not less then $300,000, and thought "it would be infinitely better that all the banks should be established in New York, Philadelphia, Boston, Cincinnati, St. Louis, and such cities as those." He said "they had had some experience in the West with banking laws which permitted the organization of banks in out-of- the-way places, obscure villages, and unknown cross-roads."

--Mr. Powell of Kentucky, who was most persistent in his advocacy of a currency based on gold and silver coin, moved to "strike from the bill the words which prevented the acceptance of the National bank notes for duties on imports." These duties were payable in coin in order to secure gold with which to pay the interest on the public debt. In supporting his amendment, Senator Powell said that if the bill became a law the fact that they could not be received for customs would tend to depreciate the notes, and he wanted the credit of the paper money kept up if the country was to have no other. His motion was defeated.